Price Action

All Eyes On Yellen As Global Stocks Rebound Despite Brexit Fears, Record Low Yields

US equity index futures and global stocks rebounded for the first time in 6 days, ahead of Federal Reserve Chair Janet Yellen’s remarks, while Chinese manipulation prevented a selloff in Chinese stocks when MSCI refused to add the country to its EM index due to fears about... manipulation. Sterling has rebounded despite ongoing Brexit doom and gloom. Oil is the only key commodity that has failed to stage a modest rebound, while gold is down alongside the dollar, just because.

JPM's Quant Guru Unveils The $1 Trillion Catalyst That Will Unleash The Next Market In Turmoil

"About ~$1,000Bn of S&P 500 options expire this week. The gamma imbalance turned towards puts yesterday ($9bn per 1% currently), and this will likely push realized volatility higher near term. Post expiry, clients are likely to roll put strikes higher, which will also be supportive of higher volatility. Yesterday’s large move on the VIX indicates short gamma exposure of dealers on VIX products as well." - Marko Kolanovic

€348 Million: ECB Releases First Total Of Corporate Bond Purchases

As part of today's update of the ECB's asset purchases, the central bank announced for the first time, in addition to its various other sovereign and covered-bond purchases, just how many corporate bonds it had bought in the open market under its infamous CSPP, or corporate bond buying program, which officially launched on June 3. The result: a mere €348 million in purchases on the first day in which the program was operational.

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Why wake up at 3am Eastern, or when the London session begins? Because that's when a clearly documented pattern of strength in the USD versus European crosses emerges, followed by a traditional subsequent reversal during the NY session, one which is worth between 2-3bp in each direction, if timed correctly. Do this a few hundred times per year with some leverage, and there's your 2 and 20 model right there.

Futures Slide On Rising Dollar As Global Bond Yields Hit Fresh Record Lows

Please do not adjust your screens: that off-green color you are seeing, that is not a malfunction. Yes, for the first time in six days, global stocks are lower with the MSCI all-country world index dipping from a 6 month high dragged down by lower European and Japanese equity markets, as the USDJPY dropped to a fresh five-week low while Treasury yields continued to hit new record lows because, as Bloomberg explains, "traders assessed the outlook for the global economy."

Futures Levitate To Session Highs As ECB Enters The Bond Market; Crude Hits $51

In an overnight session dominated by the latest political developments out of the US where Hillary Clinton officially claimed the democratic nomination, the financial newsflow focused on China's trade data, where exports fell 4.1% from a year earlier, in line with expectations, but imports dropped 0.4% from a year earlier, the smallest decline since they turned negative in November 2014, driven entire by soaring "imports" from Hong Kong - aka capital outflows - which soared by 243% y/y.  The other main news was the official launch of the ECB's corporate bond buying, which helped drive government bonds yields in German to new record lows, and the average yields on investment-grade corporate debt below 1%.

Iran Oil Exports Soar As Offshore Tanker Armada Comes To Tehran's Rescue

More than 25 European and Asian-owned supertankers are shipping Iranian oil, data seen by Reuters shows, allowing Tehran to ramp up exports much faster than analysts had expected following the lifting of sanctions in January. Iran was struggling as recently as April to find partners to ship its oil, but after an agreement on a temporary insurance fix more than a third of Iran's crude shipments are now being handled by foreign vessels.

"You Are Here"

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Futures Flat Following Friday's Jobs Fiasco: All Eyes On Yellen Again

Every ugly jobs report has a silver lining, and sure enough following Friday's disastrous jobs report, global mining and energy companies rallied alongside commodities after the jobs data crushed speculation the Fed would raise interest rates this month.  “The disappointing U.S. jobs report on Friday means that a summer Fed rate hike is off the table,” said Jens Pedersen, a commodities analyst at Danske Bank. “That has reversed the upwards trend in the dollar, supporting commodities on a broader basis. The market will look for confirmation in Yellen’s speech later today.”

Futures Flat, Gold Rises On Weaker Dollar As Traders Focus On OPEC, Payrolls

After yesterday's US and UK market holidays which resulted in a session of unchanged global stocks, US futures are largely where they left off Friday, up fractionally, and just under 2,100. Bonds fell as the Federal Reserve moves closer to raising interest rates amid signs inflation is picking up. Oil headed for its longest run of monthly gains in five years, while stocks declined in Europe.

Global Stocks Unchanged; US Futures Rise Above 2,100 As Traders Celebrate Memorial Day

With the US closed for Memorial Day and UK markets also offline, overnight volumes have been weaker than normal on little newsflow. The main story remains the stronger USD which not only led to the lowest Yuan fixing since February 2011 but pushed the USDJPY as high as 111.50 overnight before paring gains. Europe’s Stoxx 600 is unchanged on poor volume, after earlier rising above the 200 DMA for the first time in 2016. US equity futures were 0.2%, or 4 points higher, currently resting just above 2,101 with the last trading day of May tomorrow expected to push the cash market over 2,100 as well.

All Eyes On Yellen: Global Markets Flat On Dreadful Volumes, Oil Slides

In a world where fundamentals don't matter, everyone's attention will be on Janet Yellen who speaks at 1:15pm today in Harvard, hoping to glean some more hints about the Fed's intentionas and next steps, including a possible rate hike in June or July. And with a long holiday in both the US and UK (US bond market closes at 2pm today), it is no surprise overnight trading volumes have been dreadful, helping keep global equities poised for the highest close in three weeks; this won't change unless Yellen says something that would disrupt the calm that’s settled over financial markets.